Investment Market Update

Transkrypt

CEE Q2 2012
Downturn except in CZR and Poland
 The investment market activity among CEE markets registered a strong
slowdown in Q2 2012 with only €327 invested, down from €834m in Q1. This
declining trend affected the local markets differently. However, the Czech
Republic and Poland continued to dominate the CEE investment market in
Q2.
25 July 2012
Contents
Executive summary
1
Economic context
2
CEE overview
3-6
Czech Republic
7
Hungary
8
Poland
9
Romania
10
Other DTZ Research reports
11
Authors
Lenka Sinderalova
Head of Consulting & Research
Czech Republic
+420 602 773 592
 The resilience of Czech and Polish banks helped domestic investment to
make their comeback in Q2, whilst overseas and intra-region investors
reduced their market share.
 Market activity rebounded in Q2 in the Czech Republic following a muted
activity in Q1. Identified as the most active market in CEE, the Polish market
saw its volume decline to €122m in Q2 down from €717m in Q1.
 Offices became the preferred asset class among investors operating in CEE
markets with €207m invested in Q2 while retail registered a strong decline to
€106m from €471 on a quarterly average in 2010 and 2011. The lack of retail
assets opportunities constrained clearly the market activity.
 Prime yields are expected to remain at high levels over the next years, as
investors adapt to new market regulations and conditions. Prime office yields
are ranged between 6.25% in Prague and Warsaw and 8% in Bucharest.
Eanna Maksay
Research Analyst - Hungary
+36 1 472 7297
Kamila Wykrota
Associate Director, Consulting
& Research - Poland
+48 (0)22 222 3133
Claudia Scarlat
Senior Analyst - valuation
Romania
+40 21 310 3100
Ivan Biojo
Analyst - CEMEA
+33 1 49 64 40 72
Figure 1
Quarterly investment volume in CEE, EUR m
2 500
2 000
1 500
1 000
500
0
Contact
Magali Marton
Head of CEMEA Research
+33 1 49 64 49 54
www.dtz.com
Czech Republic
Hungary
Poland
Romania
Source: DTZ Research
1
CEE Q2 2012
Economic context
Weaker economic context for 2012 in CEE. Poland
appears more resilient to the European downturn
Figure 2
GDP annual growth
6%
4%
The European sovereign crisis continued to impact
negatively the economic development in the Eurozone
and in CEE as well. The year 2012 appears already as
one of the most challenging with a 0.6% forecasted
decline in the Eurozone, affecting the expected GDP
performance for CEE. However, this negative impact
will be moderate in Poland and Romania, which still
anticipate a positive growth in 2012 with +2.7% and
+0.5% respectively (Figure 2).
2%
0%
-2%
2011
2012F
Czech Republic Hungary
Romania
2013F
2014F
Poland
Eurozone
Source: Oxford Economics
As in 2009, Poland managed to avoid the recession
and continues to place itself as the financial core of the
CEE. By contrast, the Czech and Hungarian economies
are affected by the weaker foreign demand and
therefore will face a contraction of their GDP in 2012.
Among CEE countries, Hungary also struggles on the
financial side. Their policy making has proven to be
erratic lately and interest rates are among the highest in
the region at 7%. Capital outflow is a reality and the
economic prospect is heavily reliant by the outcome of
the current negotiations with the IMF.
Bonds yields in CEE are ranged between 1.80% in the
Czech Republic and 7.1% in Hungary, revealing very
heterogeneous local markets. Five years bond yields
stand at 4.7% in Romania and Poland in July 2012.
From the beginning of the year, bond yields declined in
a various proportion from 0.38% in Czech Republic to
1% in Hungary (Figure 3).
Figure 3
5 years bond yields
12%
10%
8%
6%
4%
2%
0%
Czech Republic
Poland
Hungary
Romania
Source: Bloomberg
The impact of banks deleveraging is yet to be seen in
the CEE countries. Local banks have proven to be
strong as they have low reliance on external funding
and benefit from a strong deposit base. However, Basel
III regulations have induced a pull of funds by foreign
banks and thus investment is expected to contract.
www.dtz.com
2
CEE Q2 2012
CEE overview
Investment volume
Figure 4
Investment volume in Central and Eastern Europe,
EUR m
10 000
7 500
Slowdown in Q2 and H1 results are below the historical
average.
After a 2 years streak of steady growth in 2009 and
2010, investment volume in CEE declined by 47% in
H1 2012, with only €1.2bn recorded. The slowdown of
market activity has been particularly pronounced in Q2
which record only €327m invested, posting a 60%
decline q-o-q (Figure 4).
5 000
2 500
0
Q1
Q2
Q3
Q4
As a result, investment volume is down by 47% on a
yearly basis and the H1 2012 performance with €1.2bn
is by far below the H1 average recorded since 2001
standing at €1.6bn.
Figure 5
Quarterly investment volume in CEE, EUR m
2 500
Local disparities in market activity
The decline in market activity recorded in H1 2012 was
heterogeneous among CEE markets and its impact has
been different in the local markets.
2 000
1 500
1 000
500
Poland, which usually dominates CEE market activity,
has registered a strong decline from €717m invested in
Q1 to only €122m in Q2. By contrast, the Czech
Republic recorded an increase in investment volume
with €159m in Q2 following a muted Q1. Together,
these 2 countries accounted for 90% of market share in
H1 2012. A subdued activity has been registered in
Romania (€25m) and in Hungary (€20m) since the
beginning of the year (Figure 5).
No deals above €100m in Q2
Investment activity by lot size reveals a higher
proportion of deals between €50m and €100m in Q2
with 3 transactions identified in this range of price (one
in Warsaw and 2 in Prague). Market activity in lot size
above €100m was muted as no deals were registered
in Q2.
As a result, the average lot size moved down to €27m
in Q2 from €104m in Q1. The higher lot size registered
in Q1 was mainly linked to the €475m acquisition
realized by a fund of Unibail-Rodamco for 77% of stake
into Zlote Tarasy, a retail office complex.
0
Czech Republic
Hungary
Poland
Romania
Source: DTZ ResearchFigure 6
Investment activity in CEE by lot size, EUR m
100%
120
80%
100
80
60%
60
40%
40
20%
20
0%
0
Under 10m
50-100m
Average lot size
10-20m
100-200m
20-50m
200-500m
www.dtz.com
3
CEE Q2 2012
Source of capital
Foreign banks pull funds as capital reserve regulations
tighten.
As overseas and intra-region investors reduced their
purchasing activity in Q2, domestic investors made
their comeback with €100m of sales in Czech Republic
and in Poland (Figure 7).
Figure 7
Investment activity in CEE by source of capital,
EUR m
2 500
2 000
1 500
1 000
500
Intra-regional investors - those located in Europe but
investing outside their home markets – were less active
in Q2 with volume declining from €587m in Q1 to
€156m in Q2. They focused on Grade A office
buildings in Prague and in Warsaw and in the retail
sector of Romania.
0
Domestic
Intra-region
Inter-region
The capital flows coming from outside Europe remained
subdued with one transaction done by an US investor
in Czech Republic.
Figure 8
Investment activity in CEE by investor type
Investor type
Institutional investors make a shy comeback
The uncertain economic outlook of the European
economy induces a step back of investors from markets
perceived as riskier. As a result, private property and
quoted investors reduced their activity in CEE from
€809 m in Q1 to €14m in Q2. Whilst institutional and
especially private property companies took over the
gap left (Figure 8).
Life insurance companies are expected to increase
their exposure to the real estate market. Their
acquisitions are still relatively modest with only €20m
invested in H1 2012. However some recent
announcements from Vienna Insurance Group and
Allianz suggest a higher investment volume for the near
term. Commercial real estate yields are currently much
more attractive than bond yields in Western Europe.
100%
80%
60%
40%
20%
0%
Institution
Private Property Vehicle
Others
Private Property Company
Quoted investors
Figure 9
Net investment in CEE by investor type, EUR m
1 000
500
0
Quoted investors continued to be more active on the
sale side (Figure 9).
-500
-1 000
Institution Private
Private Quoted
Others
Property Property investors
Company Vehicle
Q1 2011
Q2 2011
Q3 2011
Q4 2011
Q1 2012
Q2 2012
www.dtz.com
4
CEE Q2 2012
Property type
Figure 10
Investment in CEE by asset type
Offices back in favour
100%
Offices continue to be the preferred asset class among
investors in CEE markets and accounted for 60% of the
investment volume in Q2. Usually perceived as less
risky than other asset classes, the office sector offers
the best possible risk return ratio.
80%
60%
40%
20%
Investment in retail and industrial assets is far behind in
terms of volume, while no investment in mixed-use
assets was recorded in Q2. The lack of retail assets
opportunities constrained the market activity; however
investors willing to invest on this segment will operate
with a high degree of selectivity to secure their rental
income (Figure 10).
The slowdown of market activity has impacted both
retail and office investment to varying degrees.
Investment in retail accounted for €106m in Q2, far
below the historical quarterly average of €471m since
2010. By contrast, investment in office appears as more
resilient with €207m of acquisitions in Q2, below the
historical average at €389m.
Czech Republic and Poland on the top
The Czech Republic and Poland concentrated all office
investment activity in Q2 2012.This is mainly explained
by the appeal of Warsaw as the financial hub of CEE
and to some extent of Prague (Figure 11).
0%
Office
Retail
Industrial
Mixed Use
Figure 11
Investment by asset type and country, Q2 2012,
EUR m
300
200
100
0
Investment in retail was more diversified in terms of
location with the biggest transactions registered in
Czech Republic and Romania in Q2.
Czech Republic
Hungary
Poland
Romania
www.dtz.com
5
CEE Q2 2012
Yield trends
Stable prime yields in the core markets. No further
compression expected in the near term
Prime office yields remained stable across CEE. The
split between the couple Warsaw-Prague and
Budapest-Bucharest remained unchanged in Q2 2012
(Figure 12)
Figure 12
Prime office yields in CEE
14%
12%
10%
8%
6%
4%
Warsaw and Prague are the most attractive markets in
the region and this translates into their prime office
yields standing at 6.25%. As in most mature markets in
the region, yields volatility is less important there than
in other CEE countries (Figure 13)
Budapest’s yields are still at a very high level, close to
the 8.25% peak recorded in 2007 and to a lesser extent
the 9% peak in 2000. Bucharest’s yields still have some
room for further compression. At 8% in Q2, their
highest value was 12.5% in 2003 and their lowest was
5.6% in 2007.
No changes in prime office yields are expected in the
near term as uncertainty about the European crisis
prevent any rush of investors into the CEE markets in
the short term.
In the other sectors – retail and industrial - prime yields
are also expected to remain stable until the end of 2012
with the most attractive pricing in Prague and Warsaw.
Prague
Budapest
Warsaw
Bucharest
Figure 13
Prime office yields in Q2 2012 – changes 2007-2012
10%
9%
8%
7%
6%
5%
4%
3%
2%
Bucharest
Budapest
Prague
Warsaw
www.dtz.com
6
CEE Q2 2012
Czech Republic
Despite a quarter-on-quarter increases in investment
activity and a significant pipeline of transactions,
uncertainty remains on the market
Total investment volume in H1 2012 reached €179m
representing a 76% decline on the first half of 2011. Q2
2012 investment volume amounted to €159m, posting a
2% increase to Q2 2011.
The investment market is negatively impacted by a high
level of uncertainty regarding the future of the economy
and the bank’s lending capacity. To this is added the
expected impact of Basel III and the even tougher
European regulations.
In this context, international investors continue targeting
prime Grade A properties as was proved by the
purchase of Hagibor Office Centre (Radio Free Europe)
by L88, an American investment company. Czech
private investors and private property companies are
looking at regional properties or Grade B assets. There
are currently several opportunities for purchasing key
office and retail development sites and projects in
Prague.
Figure 14
Investment volume in Czech Republic, EUR m
3 500
3 000
2 500
2 000
1 500
1 000
500
0
Q1
Q2
Q3
Q4
Figure 15
Investment volume by sector in Czech Republic
100%
80%
60%
40%
20%
0%
Prime yields remained stable q-o-q. For prime office
space they reach 6.25%. For prime industrial properties
with a minimum of 10 years secured rental income
yields stand at 8%. Prime yields for high street retail
and prime shopping centres stand at 6.25%. Prime
yields are expected to remain stable in 2012 for all
sectors.
Office
Retail
Industrial
Mixed Use
Figure 16
Due to the lower activity in H1 2012, we have revised
downwards our forecasts and expect the total
investment volume to reach €1bn at the end of the year
compared to €1.5bn forecasted previously in Q1.
Prime yields in Prague
9%
8%
7%
6%
5%
Office
Industrial
Retail
www.dtz.com
7
CEE Q2 2012
Hungary
Slight market activity in H1 2012. Pricing is still unclear
for buyers as vendors are not yet ready to give some
discount.
The uncertainty concerning Hungary’s economic
outlook and the unpredictable political environment
wiped off the country from the radar of most large
institutional investors. After Heitman’s major acquisition
(€232m in 2 transactions) in 2011, there was no
significant market activity on the Hungarian market in
H1 2012.
Some vendors are warily scanning the market for
potential buyers without putting officially their assets
onto the market. However, there have been a few
transactions underway and some others where early
interest has been registered from potential buyers.
Banks are also getting more active in marketing some
of their better assets.
Two types of potential buyers are currently active on
the market. Some of them are seeking prime or good
quality properties with long term leases at a somewhat
discounted price level. However few vendors are ready
to sell at such low price levels. Gap in pricing
expectations between vendors and purchasers are still
huge.
The majority of investors are opportunistic and prefer
waiting for acquisitions from liquidations and bank
portfolios in order to secure an easy value-added
strategy.
The most sought after sectors are either retail or office
but activity is also visible from investors specialized in
the logistics / industrial sector.
Figure 17
Investment volume in Hungary, EUR m
2 500
2 000
1 500
1 000
500
0
Q1
Q2
Q3
Q4
Figure 18
Investment volume by sector in Hungary
100%
80%
60%
40%
20%
0%
Office
Retail
Industrial
Mixed Use
Figure 19
Prime yields in Budapest
Prime gross initial yields for Budapest have remained
unchanged standing at 7.25%-7.75% for retail, 7.5%8.0% for office, and above 9% for industrial/logistics.
10%
9%
8%
In general, the speed of closing transactions slowed
down in all asset sectors as a result of longer due
diligence periods and time-consuming bank financing
negotiations.
7%
6%
5%
Office
Industrial
Retail
www.dtz.com
8
CEE Q2 2012
Poland
Investment volume and yields to remain stable in 2012
After years of a downward trend linked to the global
financial turbulence, the investment activity in Poland
started bouncing back at the start of 2010 and still
proves to be reviving. The volume of investment
transactions reached €2.6bn in 2011, a 37% increase
on 2010 and 25% more than the annual average
recorded from 2001 to 2010.
Figure 20
Investment volume in Poland, EUR m
5 000
4 000
3 000
2 000
1 000
0
During the first six months of 2012, €839m was
invested, representing an 18% decline compared to H1
2011. The most significant transaction recorded in H1
2012 was the sale of shares in Złote Tarasy complex in
Warsaw. This deal explains the high market share for
mixed use assets recorded in Q1 2012.
Developers continued to be widely represented
amongst the most active sellers while investment
management companies and special purpose funds
were the most active players on the buy side
After two years of upward pressure on yields in all
sectors, these started to compress in 2011. Prime
yields during the first six months of 2012 were relatively
stable oscillating around 6.00% for retail properties,
6.25% for office and 7.75% for industrial. Given the
increase in uncertainty and wider reassessment of
short- and medium-term growth prospects, no further
yield compression is expected for the remainder of
2012.
Q1
Q2
Q3
Q4
Figure 21
Investment volume by sector in Poland
100%
80%
60%
40%
20%
0%
Office
Retail
Industrial
Mixed Use
Despite the current uncertainty on the Eurozone economy,
the resilience of the Polish economy among the CEE
region should attract capital flows coming from cross –
border investors. As the second half of the year has been
usually stronger than the first when it comes to the volume
and number of transactions, and given the quality of
investment products currently available on the market, we
may still expect the volume of transactions for the whole
year to be similar to those recorded in 2011.
Figure 22
Prime yields in Warsaw
9%
8%
7%
6%
5%
Office
Industrial
Retail
www.dtz.com
9
CEE Q2 2012
Romania
Low level of activity in H1 2012 but in line with the last 2
years performance
After an encouraging Q1 2012 with €99m of
acquisitions, the Romanian investment market
registered a slowdown in Q2 with €25m. The only
transaction of the quarter was the sale of 100 ha of land
from the former Tractorul platform in Brasov City. This
deal brought the investment volume to €124m in H1
2012, in line with the performances recorded over the
same period in 2010 and 2012. H1 2012 equals the
level of investment of the entire year of 2009.
Figure 23
Investment volume in Romania, EUR m
2 000
1 500
1 000
500
0
Q1
Lending capacities from banks remained tight in 2012,
with a direct impact on the investment activity. In this
context, market conditions continued to be challenging
for investors willing to deploy capital into the country
and putting pressure on the exit returns for developers.
Q2
Q3
Q4
Figure 24
Investment volume by sector in Romania
100%
Market activity has been exclusively driven by crossborder investors with NEPI, a South-African fund,
signing the biggest transaction of the year (City
Business Center in Timisoara for €95m.
80%
60%
40%
20%
The retail sector continued to be attractive for potential
investors sustained by the increase of retail
consumption registered in H1 2012. Romania holds the
third place in retail consumption growth across UE with
a 5.9% increase.
Q2 2012 saw prime office, retail and industrial yields,
remain stable compared to the previous quarter. Prime
office yields are currently around 8%, prime retail at
8.5% and 10.5% for prime logistics.
Prime assets in Bucharest are expected to attract
foreign investors in the near future. In this respect, we
expect a moderate increase in the transaction volume
for the rest of 2012. Investment volume for the whole
year is expected to reach €250 / €300m, a decrease
from our original €400 / €450m estimation for 2012.
This estimation is based on the assumption that banks
will bring to the market the assets of non-performing
loans as part of their process to deleverage.
The current investment climate offers opportunities to
equity holders, with a low competition among the few
active buyers and banks offering lower LTVs, thus
investors with a strong liquidity position are seldom
rewarded with the lion’s share.
www.dtz.com
0%
Office
Retail
Industrial
Mixed Use
Figure 25
Prime yields in Bucharest
12%
11%
10%
9%
8%
7%
6%
5%
Office
Industrial
Retail
10
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Contacts
Ryan Wray
Associate Director, Investment – Czech Republic
+42 (0) 234 262 275
[email protected]
Gyorgy Lindwurm
Associate Director, Investment - Hungary
+36 1 472 7283
[email protected]
Bence Vécsey
Associate Director, Investment and Business Development
– Hungary
+36 1 472 7281
[email protected]
Marek Paczuski
Associate Director, Investment - Poland
+48 (0)22 222 3000
[email protected]
Cristian Ustinescu
Investment Director - Romania
+40 21 310 3100
[email protected]
Disclaimer
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responsibility for any damage or loss suffered as a
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